Monday, October 30, 2006

The Stern report - waving while drowning

According to Sir Nicholas Stern, a former chief economist at the World Bank, climate change represents the greatest and widest-ranging market failure ever seen. Ignoring climate change could lead to economic upheaval on the scale of the 1930s’ Depression. But his reliance on the very same market economy for solutions fatally undermines his much-trailed report into the economic consequences of global warming.

His report obscures the starker reality that the heating up of the planet is a direct and observable consequence of the expansion of capital since the industrial revolution, accelerating towards global catastrophe in the last three decades. As a result, Stern, whose report was commissioned by the New Labour government, is left with solutions that are either inadequate or beyond the capacity of the existing economic and political system to deliver. His warnings are stark enough. If no action is taken, climate change will reduce global consumption per head by between 5% and 20%, and is likely to be at the upper end of that range. In other words, everyone in the world would be a fifth poorer than they would otherwise have been. Except that these costs will not be shared evenly. The poorest countries and the poorest people in each nation, will suffer most. Failure to act would turn 200 million people into refugees as their homes will by hit by drought or flood.

Stern’s core argument is that spending large sums of money now on measures to reduce carbon emissions will bring long-term dividends on a colossal scale. It would be wholly irrational, therefore, not to spend this money. Part of his solution is taxation. Another is through rationing the amount of carbon emissions that any business - or any individual - can make. Stern’s answer to market failure is… to resort to the market with a major expansion of carbon trading, whereby you can buy and sell credits to emit CO2. Another imperative for governments is to encourage research and development on low-carbon technologies. Governments should also encourage "behavioural change", through regulation - such as imposing tighter standards on the energy efficiency of buildings - as well as educating the public about the true costs of wasting energy.

So what can we expect to happen? Anticipating the potential profits to be made from Stern’s proposals, and in an attempt to corner the market, on Friday, global investment bank Morgan Stanley announced its intention to invest $3 billion in carbon trading. New Labour’s Environment Secretary David Miliband has leapt up with his proposals to pass the cost onto consumers with a raft of taxes. He was immediately trumped by Gordon Brown’s huge enthusiasm for "massive expansion of carbon trading to tackle global warming, rather than raising billions of pounds in green taxes". Al Gore, whose global campaign to reduce climate change places virtually all the blame on consumersm, will be Brown’s newest adviser.

All this is the equivalent of waving while drowning. Time is running out – fast. The polar caps are already melting away. Extreme weather is decimating grain crops in many parts of the globe, including the US and Australia. Corn and wheat prices have risen 60% this year and these vital commodities are now increasingly the subject of control by investment speculators. Where there’s a shortage there’s always a fast buck to be made. Immediate and drastic actions to cut carbon emissions are needed right now, covering production, distribution, patterns of work, travel and consumption. These measures should point towards a complete reorganisation of economic life, putting science and technology at the disposal of society as a whole rather than shareholders and stock markets. We can’t expect or rely on capitalism and its markets, or the politicians and governments they sponsor in London and Washington, to propose these kinds of actions. To save the planet from catastrophe means taking the making of history into our own hands.

Gerry Gold, economics editor


Anonymous said...

It looks like we are doomed. The public will only react to your proposals when it is too late, after a series of natural disasters and millions of africans moving to England, but not London, as that may be underwater.
I for one, have lost my moral compass, taught to me by my father. I, like you used to be a socialist. Now the only job open to me is that of Labour leader. Depressing. Arctic circle?
Going. At least I have my beloved Arctic Monkeys.
Gordon Brown.

Helen Dew said...

Some where I've read that it takes about 40 years for the effects of emissions to manifest. I don't recall that detail being included in Al Gore's film; neither do I see it referred to in recent articles, including the one above.
If the statement is true, measures to avert a ecological catastrophe we will have to go even further than the above article suggests, and do so with great urgency!
I beleive that what is required is no less than the measures and speed employed when war is declared!
Helen Dew